Hong Kong stocks rise after U.S. rate cut
Wednesday November 7, 11:15 AM
HONG KONG (Reuters) - Hong Kong stocks rose on Wednesday after the United States, the territory's second biggest trading partner, aggressively cut interest rates and the Federal Reserve hinted more reductions may be on the way.
Banking giant HSBC Holdings and selected property stocks like Hang Lung Development were among the top gainers as some investors hoped the reductions would translate into greater demand for property and mortgages by the second quarter of next year.
The Hang Seng Index was up 0.65 percent at 10,423.38 shortly after the open, but analysts said the gains may be limited as much of the rate cut had already been factored into share prices.
"What we're seeing is a bit of a...rally following the rate ut, but there is really no reason to get too excited because the economy is still weak," said Andrew To, sales director at Tai Fook Securities.
The U.S. Federal Reserve cut its key federal funds rate for overnight bank lending by a half percentage point to two percent, the tenth cut this year. Hong Kong usually tracks U.S. rate moves because of its currency peg to the U.S. dollar.
The Hong Kong Monetary Authority reduced its base rate charged through its overnight discount window also by 50 basis points to 3.5 percent.
The Bank of East Asia was the first to follow but said it plans to reduce its best lending rate and deposit rates by 25 basis points, a smaller reduction than the base rate cut. The move will take its deposit rate to 0.25 percent.
Analysts had speculated some local banks would not cut rates as deeply as the Fed in a bid to protect rapidly thinning margins.
Bank of East Asia shares were up 0.23 percent at HK$15.50, while HSBC was up 1.42 percent at HK$89.25.
Hang Lung shares were up 1.52 percent at HK$6.70.
Shares of top Chinese PC maker Legend Holdings Ltd were up ahead of the release of its second quarter earnings, expected during the midday break.
A slowdown in China's personal computer sales growth in July-September is expected to take a bite from profits.
Analysts expect Legend to post earnings of about HK$208.9 million (US$26.8 million) for its second quarter ended September 30, according to the average of six investment houses surveyed by Reuters. Some downgraded their forecasts following the recent release of disappointing market data.
Legend shares were up 1.63 percent at HK$3.125, but are down 36 percent so far this year, underperforming the benchmark Hang Seng Index, which has lost about 31 percent.
Total turnover stood at HK$1.6 billion (US$205 million) after about an hour's trade, about the same as Tuesday morning. Gainers edged out losers 158 to 141 with 455 issues unchanged.
sg.news.yahoo.com |
